Getting to breakeven cash flow is a crucial milestone toward a sustainable business model. To reach breakeven faster, you need to reduce the time it takes to increase your buying rate. An increase in your buying rate can be due to an increase in advertising effectiveness or by making your word of mouth marketing message more likely to spread.
A pure advertising strategy can predictably yield an increased buying rate. However, advertising is expensive.
A pure word of mouth marketing strategy is exciting because it seems to offer a free lunch. That is, all you need to do is seed your product with a few people, and your marketing message will spread through your target market with nothing more than a shoestring budget.
Except there are no free lunches. Pure word of mouth success is exceedingly rare. Conditions have to be just right for a word-of-mouth campaign to work.
If you want the adoption of your product or service to spread like wildfire, you don’t want to rely on your ability to miraculously place a single match in just the right spot. A disciplined advertising campaign is like lighting several matches and dropping them throughout your target audience. Advertising can stimulate adoption more or less randomly throughout your total market population, and word-of-mouth techniques can provide a kicker that helps those little fires of customer adoption spread. Real-world experiments suggest that advertising and word-of-mouth techniques can yield rates of adoption of 45% to 100% greater than with advertising alone.
